Based on the assessments, effective management of the enterprise's financial risks is carried out, which is a carefully planned activity and an integral part of financial management. When managing the corporation's financial risks, a set of methods and measures is used aimed at tracking, calculating and predicting threats to the project. This process requires searching for and correctly interpreting various information.
However, it is not enough to simply predict risks; it is also necessary to prevent their occurrence in time. Questions of tactics and strategy become decisive here. Risk management should be focused on choosing the right course and indicating the right direction for business.
Risk managers are sought-after specialists who possess a number of important skills. If you want to participate in the financial market and achieve high results in the future, then you should aim to develop competencies in this area.
Methods of reducing financial risks
Optimizing business engineer data package finances requires a multifaceted approach to risk management. Let's look at the most effective methods:
Avoiding actions that are likely to result in the risk occurring
For example, a company specializing in cabinet furniture plans to enter the upholstered furniture market. If the project is successfully implemented, profits can increase significantly. The presence of a major competitor and a lack of own funds become factors that can force the company to take out a loan.
Methods of reducing financial risks
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However, in this case, reaching the breakeven point will take about a year with high sales. If the project fails, the company will be left with large debts.
Deciding to abandon such a project can prevent potential losses.
Insurance
This is a key strategy for managing financial risks. Typically, businesses insure their assets and business risks. However, insurance can also cover other areas, such as production downtime.
Suppose a plant specializing in the production of flexible packaging has purchased new equipment to replace older equipment. According to the terms of the supply contract, the new equipment will be delivered in parts over an extended period of time. If the supplier fails to meet the delivery deadlines, the production schedules and shipments to customers may be disrupted.
In such circumstances, the company may wish to take out an insurance contract that covers potential losses arising from downtime in flexible packaging production due to delays in new equipment.
Hedging
The use of a hedging strategy is the implementation of certain actions or conclusion of transactions in order to balance possible risks and mitigate their negative consequences.
To illustrate, let's look at a specific situation: a company plans to sell its potato harvest in the fall at a certain price. There is a risk that by the time of sale the price of potatoes will fall significantly, which will lead to a decrease in profit.
The company can enter into a futures contract for potatoes at the price at which the product is expected to be sold in the fall. Thus, even if prices on the market fall, the enterprise will be able to sell the harvest at the price set in the contract. This will allow the company to pay only for the contract price.
Hedging strategy
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